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A stand for ‘Fairness’

BY HBSDEALER Staff

Americans are correct to question laws that are packaged in ways that seem too good to be true. For instance: "No Child Left Behind Act" or the "Affordable Care Act." My personal suggestion is: "Strengthening America through higher pay for Editorial Writers Act."

Who could be against those?

The Marketplace Fairness Act stands accused of carrying a deceptive title. Several arguments are being made across the blogosphere (and even the pages of the National Review) arguing against the act and on the grounds that it’s blatantly unfair and unwise.

I am not moved by those arguments.

The National Lumber and Building Material Dealers Association (NLBMDA) recently emphasized online sales tax parity as a key lobbying point. And because of the growing importance of the Internet in home improvement retailing, I would like to respond to some of the major charges against the act here.

Here are some of the accusations hurled at the act, and an editor’s counterpoint:

Charge: It’s a new tax!

Response: The Marketplace Fairness Act is designed to create a level playing field for retailers, allowing states to require online retailers to collect sales tax when a consumer in one state buys something from an e-tailer in another. It also calls for a simplified system of cross-border taxation.

It’s not a new tax. It’s a tax-loophole remedy. Purchases are already subject to sales tax; they’re just not collected. And that puts retailers who do collect them at a disadvantage.

Charge: It’s taxation without representation. If state A raises a sales tax, a company in state B cannot turn to his elected representatives. Neither can it move out of state A in protest.

Response: This argument seems to embrace the Spirit of ’76. But it’s also the rationale behind every sports team magnate who demands taxpayers fund their new luxury stadium, or else the beloved home team is going to pack its bags for Scranton or Toledo. It seems to be an embrace of tyranny in my opinion.

Charge: Small Internet sellers will be at a disadvantage trying to comply with all the different tax codes.

Response: Is there any doubt that someone will invent a simple TurboTax-like solution to help retailers pay the right tax? Of course, not.

Charge: What about the off-shore Chinese retailers that aren’t ever going to collect taxes on purchases?

Response: You’ve got me there. One has to admit that the act won’t solve the Chinese piracy issue. It also won’t solve the Mideast peace question. But that’s a pretty high bar to set. The act does take a step toward fairness at home.

Charge: Yahoo, Ebay and other dot-coms don’t like it. They’re the retail innovators for the economy of the future.

Response: Amazon likes it. Here’s what Amazon VP Paul Misener wrote in a supportive letter to the bill’s sponsors:

"Amazon.com has long supported a simplified nationwide approach that is evenhandedly applied and applicable to all but the smallest volume sellers. With this in mind, I am writing to thank you for your bill, which will allow states with simplified rules to require sales tax collection by out-of-state sellers who choose to make sales to in-state buyers."

Charge: It’s not fair.

Response: The Marketplace Fairness Act is fair. Let’s move on.

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From HIRI, a deep data dive in Orlando

BY HBSDEALER Staff

Orlando, Fla. — It’s a brave new world for home improvement researchers.

Take for instance the gathering of more than 70 research and marketing professionals here for the Home Improvement Research Institute’s (HIRI’s) Spring Conference.

While Gwen Ishmael, senior VP insights and innovation for Decision Analyst, was leading a discussion on social media opportunities, a HIRI member in the audience was taking advantage of one. In an experiment that wouldn’t have happened just a few years ago, Steve Hauser of Lowe’s texted his son and gathered information from a targeted captive audience — high school and college students on a school bus. The results from the convenience sample of the spontaneous survey supported one of Ishmael’s points about the plateau of social media among teens (about half of the teens on the bus use Facebook less than they used to.)

More importantly, the little survey showcased the power that’s available to the modern researcher through modern tools. Facebook, Twitter, texting and other modern social media open doors to researchers, but must be managed carefully, she said.

Social media statistics are intriguing, to say the least. Ishmael pointed to 1.5 billion as the estimated figure for people using social networks. And 70% of those are members of at least one social network — most often a combination of Facebook combined with Twitter or LinkedIn.

But the flip side of that coin is that usage appears to be hitting a wall. “The social media landscape is stabilizing,” she said. “Most people want to keep their digital lives as they are.”

They’ll make exceptions if a social network provides some kind of unmet need, she added.

Researchers need to understand that there’s a price to pay when mining these new tools for valuable insights.

“A lot of people look at social media and say, ‘Great, here’s free research,’ ” Ishmael said. “But it is not free research. It requires time and resources.”

And while the ability to reach into a captive target audience (like the teens on the bus) suffers from small sample sizes, similar exercises can help researchers test hypotheses or provide direction for other research projects.

Speaking on the world’s largest social network, Ishmael said: “Facebook is good for connecting with people who already like you.” It’s also good for capturing insights into the language and words customers use when talking about specific products. And most importantly, it’s not a vehicle that she be approached half-heartedly.

“Monitoring of Facebook is a must,” she said.

Ishmael’s presentation, “Looking beyond classic market research, exploring new channels and social media opportunities with the proper focus,” was one of several during the HIRI conference to examine tools beyond classic market research. The seven presentations also included such titles as “Using Qualitative Research to Deepen and Expand Quantitative Insights” and “Engaging the Connected Consumer for Deeper Insight.”

Insights were the name of the game during the April 17 event here in Orlando.

For instance, Ken Habarta, VP consulting for The Futures Company, described qualitative research as “an exploration into real insight.” The qualitative category of research includes the “usual suspects” of focus groups, in-depth interviews and shop-alongs, but also includes new forms, such as the study of consumer scrapbooks or diaries and numerous online social networking tools.

Habarta pointed to four research techniques that he described as “the not-so-usual suspects.”

 

• Scrapbooks/journals/diaries

In the hands of consumers, these help researchers start the thought process and gather information on attitudes and opinions, he said.

 

• Streetscapers

A network of culturally connected individuals across the globe, streetscrapers are used as respondents and interviewers. “We ask them to provide their thoughts and opinions on specific topics — as well as task them to tap into their networks to collect information.”

 

• Social observatory

Described as a custom-built, private, online social-networking portal, it includes photo diaries, blogs, videos, forum discussions and live chats.

 

• Co-creation workshops.

Kind of like a focus group on steroids, these workshops are a “hands-on interactive process helping identify and synthesize key thought-starters.”

 

As further explanation, he said the purpose of research and data is to tell a story, and a great way to tell a story is to combine the people and behavior-focused quantitative side with the number-crunching qualitative side.

“Data alone is not an insight,” Habarta explained. “Data is a fact. It is not, however, an insight of its own. An insight rests on a deeper understanding of that information.”

And as communication evolves, so too must research, according to Laura Fitzpatrick, VP social media for research firm Ipsos.

“In the new normal, brands need to connect with people in the context of their lives and via the tools that people are using to communicate,” said Fitzpatrick.

The event also included a thorough presentation on the outlook for home improvement and a mixed message for future home improvement spending. According to James Gillula, managing director of consulting services for IHS Global Insight, one of the takeaways was an expectation of modest growth for consumer spending in 2013.

“There is a lot of hope that we’ll get to a point where we’ll have a little faster economic acceleration,” Gillula said. “And certainly the idea that there should be a lot of pent-up demand out there is relevant for home improvement products market.“

One of the key slides from Gillula’s “Outlook for the U.S. Economy and Home Improvement Spending” presentation looked at the nominal dollar and constant dollar market forecast. The forecast varied depending on whether the sales forecast was measured in nominal dollars or constant prices.

Nominally, the home improvement product market forecast called for growth to slow to 4.3% in 2013, compared with 5.4% growth in 2012. In constant prices, sales growth is expected to increase from 2.9% in 2012 to 3.4% in 2013. Both measures show accelerated growth in 2014, according to IHS Global.

The Home Improvement Research Institute is a membership-based, independent, not-for-profit organization of about 80 manufacturers, retailers, wholesalers and allied organizations in the home improvement industry. 

 

 

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A history lesson in lumber/panel prices

BY HBSDEALER Staff

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Lumber and panel markets are at a crossroads when it comes to pricing. The housing starts figure for March went above 1 million as a seasonally adjusted annual rate — the first time since June 2008 — indicating the recovery in home construction continues. As this recovery continues, prices for lumber and panels have reflected this growth, rising to levels not seen in many years.

If the housing recovery lasts, will lumber and panel prices also continue to climb? Perhaps we can draw some conclusions from OSB prices during the housing boom of 2003-2006. During this period, new-home construction was going at a feverish pace. So much so that it seemed every other driveway had a new dually pickup with a contractor’s name on the door parked in it. As the need for building materials escalated, prices rose to record levels. In April 2004, the price of 7/16-in. OSB in the Southeast reached an all time high of $528. Housing starts were 1.95 million that month. This was the high point, and still is, for OSB prices in any region.

Although housing starts continued to climb to 2.3 million during the next year, OSB prices peaked at just above $400. Why the difference? During this period, OSB producers ramped up production to a point that supply surpassed even the lofty demand of more than 2 million housing starts.

Today we are seeing housing starts just breaking 1 million, and 7/16-in. OSB prices are at or above $400. Where will the market go from here? Will home construction continue to grow toward more traditional levels and, if so, will prices for building materials follow suit? Will we see new record price levels for OSB in the near future, or will there be a repeat of 2005?

Once again, the answer lies in the hands of producers. Their destiny is theirs to control.

 

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